UTC INVESTOR AND ANALYST MEETING MARCH 16, 2018

Transcription

1 UTC INVESTOR AND ANALYST MEETING MARCH 16, 2018

2 Note: All results and expectations in this presentation reflect continuing operations unless otherwise noted. Cautionary Statement: This communication contains statements which, to the extent they are not statements of historical or present fact, constitute forward-looking statements under the securities laws. From time to time, oral or written forward-looking statements may also be included in other information released to the public. These forward-looking statements are intended to provide management s current expectations or plans for our future operating and financial performance, based on assumptions currently believed to be valid. Forward-looking statements can be identified by the use of words such as believe, expect, expectations, plans, strategy, prospects, estimate, project, target, anticipate, will, should, see, guidance, outlook, confident and other words of similar meaning in connection with a discussion of future operating or financial performance. Forward-looking statements may include, among other things, statements relating to future sales, earnings, cash flow, results of operations, uses of cash, share repurchases, tax rates and other measures of financial performance or potential future plans, strategies or transactions of United Technologies or the combined company following United Technologies proposed acquisition of Rockwell Collins, the anticipated benefits of the proposed acquisition, including estimated synergies, the expected timing of completion of the transaction and other statements that are not historical facts. All forward-looking statements involve risks, uncertainties and other factors that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the U.S. Private Securities Litigation Reform Act of Such risks, uncertainties and other factors include, without limitation: (1) the effect of economic conditions in the industries and markets in which United Technologies and Rockwell Collins operate in the U.S. and globally and any changes therein, including financial market conditions, fluctuations in commodity prices, interest rates and foreign currency exchange rates, levels of end market demand in construction and in both the commercial and defense segments of the aerospace industry, levels of air travel, financial condition of commercial airlines, the impact of weather conditions and natural disasters and the financial condition of our customers and suppliers; (2) challenges in the development, production, delivery, support, performance and realization of the anticipated benefits of advanced technologies and new products and services; (3) the scope, nature, impact or timing of acquisition and divestiture activity, including among other things integration of acquired businesses, including Rockwell Collins, into United Technologies existing businesses and realization of synergies and opportunities for growth and innovation; (4) future levels of indebtedness, including indebtedness expected to be incurred by United Technologies in connection with the posed Rockwell Collins merger, and capital spending and research and development spending; (5) future availability of credit and factors that may affect such availability, including credit market conditions and our capital structure; (6) the timing and scope of future repurchases of United Technologies common stock, which may be suspended at any time due to market conditions and the level of other investing activities and uses of cash, including in connection with the proposed acquisition of Rockwell; (7) delays and disruption in delivery of materials and services from suppliers; (8) company and customer-directed cost reduction efforts and restructuring costs and savings and other consequences thereof; (9) new business or investment opportunities; (10) our ability to realize the intended benefits of organizational changes; (11) the anticipated benefits of diversification and balance of operations across product lines, regions and industries; (12) the outcome of legal proceedings, investigations and other contingencies; (13) pension plan assumptions and future contributions; (14) the impact of the negotiation of collective bargaining agreements and labor disputes; (15) the effect of changes in political conditions in the U.S. and other countries in which United Technologies and Rockwell Collins operate, including the effect of changes in U.S. trade policies or the U.K. s pending withdrawal from the EU, on general market conditions, global trade policies and currency exchange rates in the near term and beyond; (16) the effect of changes in tax (including the recently enacted Tax Cuts and Jobs Act in the U.S.), environmental, regulatory (including among other things import/export) and other laws and regulations in the U.S. and other countries in which United Technologies and Rockwell Collins operate; (17) the ability of United Technologies and Rockwell Collins to receive the required regulatory approvals (and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the transaction) and to satisfy the other conditions to the closing of the transaction on a timely basis or at all; (18) the occurrence of events that may give rise to a right of one or both of United Technologies or Rockwell Collins to terminate the merger agreement, including on circumstances that might require Rockwell Collins to pay a termination fee of $695 million to United Technologies or $50 million of expense reimbursement; (19) negative effects of the announcement or the consummation of the transaction on the market price of United Technologies and/or Rockwell Collins common stock and/or on their respective financial performance; (20) risks related to Rockwell Collins and United Technologies being restricted in the operation of their businesses while the merger agreement is in effect; (21) risks relating to the value of the United Technologies shares to be issued in the transaction, significant transaction costs and/or unknown liabilities; (22) risks associated with third party contracts containing consent and/or other provisions that may be triggered by United Technologies proposed acquisition of Rockwell Collins; (23) risks associated with merger-related litigation or appraisal proceedings; and (24) the ability of United Technologies and Rockwell Collins, or the combined company, to retain and hire key personnel. There can be no assurance that United Technologies proposed acquisition of Rockwell Collins or any other transaction described above will in fact be consummated in the manner described or at all. For additional information on identifying factors that may cause actual results to vary materially from those stated in forward-looking statements, see the reports of United Technologies and Rockwell Collins on Forms S-4, 10-K, 10-Q and 8-K filed with or furnished to the SEC from time to time. Any forward-looking statement speaks only as of the date on which it is made, and United Technologies and Rockwell Collins assume no obligation to update or revise such statement, whether as a result of new information, future events or otherwise, except as required by applicable law. In addition, in connection with the proposed Rockwell Collins acquisition, UTC has filed a registration statement, that includes a prospectus from UTC and a proxy statement from Rockwell Collins, which is effective and contains important information about UTC, Rockwell Collins, the transaction and related matters.

3 Greg Hayes CHAIRMAN & CEO

4 United Technologies Agenda 8:00 8:10 Opening Remarks Greg Hayes 8:10 8:50 Otis Judy Marks 8:50 9:30 UTC Climate, Controls & Security Bob McDonough 9:30 9:40 Break 9:40 10:20 Aerospace Systems Dave Gitlin 10:20 11:00 Pratt & Whitney Bob Leduc 11:00 11:20 Closing Remarks Greg Hayes / Akhil Johri 11:20 11:30 End of Webcast Event / Break 11:30 1:00 Showroom / Tour CCS / Otis 1:00 1:45 Transportation to Pratt & Whitney 1:45 2:30 Pratt & Whitney Experience Pratt & Whitney 1

5 Positioned for Growth Mega-trends Urban Population (billions) 5.1 Middle Class (share of population) 2010 Revenue Passenger Miles (trillions) % B 2030E % E 2030E 8.4B E 2030E Focused portfolio of businesses positioned for accelerating growth based on powerful mega-trends Sources: United Nations: World Urbanization Prospects, 2014 revision; The Brookings Institution; Airline Monitor, June 2017 revision 2

6 Priorities 2018 Outlook Focused on execution Structural cost reduction Innovation for growth Adjusted EPS* Sales $6.85 $7.10 $62.5 $64B Structural cost reduction Organic sales* 4 6% Disciplined capital allocation Free cash flow* $4.5 $5B Excludes impact from the proposed acquisition of Rockwell Collins. *See appendix for additional information regarding these non-gaap financial measures. 3

7 Digital Opportunity Areas Service Transformation Customer Experience Image Image Arial Bold 14 pt. Service/MRO margin Contract retention Arial Bold 14 pt. Sales capture New service offerings Image Smart Factory Image Connected Products Arial Bold 14 pt. Inventory turns Labor productivity Unplanned downtime reduction Condition based maintenance 4

8 Shareowner Value Creation Focused portfolio of global franchises Accelerating growth (Organic sales* growth) Innovative products and services 4-6% Resilient business model 4% Strong performance culture 1% 2% Disciplined capital allocation E *See appendix for additional information regarding this non-gaap financial measure. 5

9 Judy Marks PRESIDENT

10 Industry Leadership 2017 industry Attractive growth fundamentals Adjusted operating profit* ($ billions) % Global presence and balance Large and growing portfolio Productivity runway Japanese peers All others C 17% B A 2.0 B A C Service portfolio (units, millions) +30% Best-in-class cash flow Segment sales: ~$71 billion A C B Note: A, B, C represent industry peers Source: Public company reports, analyst reports, and internal estimates *See appendix for additional information regarding this non-gaap financial measure. 1

11 Strategy Initiatives Progress (Otis share of new equipment segment in units, %) Accelerate innovation New equipment growth Operations excellence Service transformation New products (launches) Connected technicians (devices deployed) 1K 16K Source: Internal estimates Executing on the right strategies 2

12 Accelerate Innovation % of sales R&D spend ($M, cfx) 1.4% 1.5% 1.5% Service 2018E vs investment Up >20x 1.1% 1.1% Innovation Passenger experience Up ~4x Next generation solutions Up >20x Product enhancement & cost reduction E Digital market demands digital pace 3

13 New Equipment Growth Global segment Otis Growth strategy China (New equipment units booked, indexed) Americas China Otis Segment E Optimize operations Enhance product offering EMEA Asia (ex. China) Rest of World (New equipment backlog, cfx) Improve sales effectiveness 2017 sales: ~$33B % CAGR Deliver segmented value propositions China market stabilization key to near-term outlook Source: Internal estimates 4

14 New Equipment Performance (2017 awards) Oceanwide Center San Francisco EOLE Metro Project Paris Chase Center San Francisco Metro Line 5 (C & D) Chengdu My Home Hyderabad Metro Line 3 Nanning Pudong Airport Phase 3 Shanghai KINTEX One City Seoul Resorts World Las Vegas Westside Place Melbourne Significant global wins 5

15 Operations Excellence Manufacturing Operations cost base Priorities (2017, global manufacturing sq. ft.) (2017) Manufacturing optimization Higher cost Lower cost Installation & Service Manufacturing Sustained quality Logistics Digitalization Implement next generation operations priorities 6

16 Maintenance Revenue per unit Global portfolio Europe maintenance Europe highlights 2017 (Change in revenue per cfx) Asia (ex. China) China Americas EMEA (3%) <(1%) Cancellations Conversions (7%) 2017: 2M units Maintenance productivity Global portfolio growth encouraging trends seen 7

17 Service Transformation Expected benefits Cancellations Recaptures Callbacks Mobility & Apps Service ERP Remote / IoT Maintenance productivity Overhead Significant change management incorporating lessons learned 8

18 The Future of Otis Digitally connected Future IoT Sensors Connected units New offerings Cloud Connectivity New business models Passengers & Customers New partnerships Technicians Connected Data-driven OtisLine Service ERP Advanced analytics Self-disruption Sustained leadership embracing change 9

19 Otis 2020 Outlook Sales ($B, cfx) Adjusted operating profit* ($B, cfx) Adjusted operating profit* ($B, afx) E CAGR 3-5% Accelerate innovation % New equipment growth Operations excellence Service transformation E 2020E Strong execution and favorable markets 2014 to 2017 adjusted operating profit (afx and cfx) restated for pension accounting change (ASU ). See appendix for Pro Forma pension accounting change impact. See appendix for reported sales and adjusted operating profit (afx). *See appendix for additional information regarding this non-gaap financial measure. 10

20 Bob McDonough PRESIDENT

21 UTC Climate, Controls & Security Segment Product Line afx) Fire & Security Refrigeration Geography HVAC Sales* $17.8 billion Adjusted operating profit** $3.0 billion Adjusted operating margin 16.8% Employees ~55,000 Aftermarket New equipment Minority JVs EMEA Asia Americas Asia Americas EMEA ~$7B *Excludes unconsolidated JV sales of ~$7B. **See appendix for additional information regarding this non-gaap financial measure. Balanced portfolio 1

22 Industry Leadership Positions HVAC Fire & Security Refrigeration $9B $5B $4B afx) Attractive Durable segments, leading brands 2

23 Value Creation Growth Engineering headcount 20% Market fundamentals Brands & channels Innovation Solutions Performance 2017 Manufacturing hours Cumulative restructuring savings Net price / commodity Cumulative free cash flow* ~$450M ~$9B High cost Low cost E E E Cost leadership Operational excellence Margin expansion Cash generation *See appendix for additional information regarding this non-gaap financial measure. Continuity and evolution 3

24 CCS Priorities Performance ($ cfx) Adjusted op profit* expectation $100 cfx Adjusted op profit* $125 afx Sales expectation Organic*: low / mid single Customer centricity Reported: mid single Innovation Sales Operational efficiency Organic* 3% 7% 12% 9% 10% 7% 3% (1%) 4% Financial performance E ROS 16.8% 17.1% 17.4% 16.8% Continued growth 2014 to 2017 adjusted operating profit (cfx) restated for pension accounting change (ASU ). See appendix for Pro Forma pension accounting change impact. See appendix for reported sales and adjusted operating profit (afx). *See appendix for additional information regarding these non-gaap financial measures. 4

25 North America Residential HVAC Market fundamentals Split systems segment Growth / Focus areas Installed base 12 (Segment, units, M) (Installed base, units, M) 120 Products & innovation Competitive position 8 80 Price / cost 42 SEER ductless air conditioner New construction Add-on replacement E 20 0 Greenspeed Intelligence AC 17.5 SEER outdoor air conditioner Source: AHRI, US Census Bureau, IHS Markit, & internal estimates Profitable growth 5

26 Axis Title Commercial HVAC Products Strengthen & penetrate Service Global service growth (Sales) % CAGR Enhanced Air-Cooled High Efficiency Water-Cooled VRF Energy services backlog (In dollars) % 30XV 19DV Toshiba Carrier Product innovation / Service growth 6

27 Fire & Security Fire & Security sales Products Security Fire $3B Field Growth / Focus areas New products & innovations Regulatory / Code Digital content Recurring revenues Onity DirectKey afx) Installation Service $2B Kidde detection & alarm Chubb security monitoring Product excellence / Field investments 7

28 Refrigeration 6 4 Market fundamentals Refrigerated seaborne trade (Global tonnage, VPY%) Growth / Focus areas Emerging markets E 18E Adjacencies U.S. Class 8 truck shipments (000 s units) Efficiency / Sustainability Digital products & services Auxiliary Power Units E 250 Europe food retail points of sale (000 s of stores) E Source: ACT, Drewry, Planet Retail, internal estimates Strong fundamentals / Diversified portfolio 8

29 Innovation Low cost High cost Investments Digital engineering headcount % Results Intelligent products Efficiency upgrades Cloud-based offerings Product launches 100+/yr. Côr residential thermostat New diesel truck platform E UltraSync smart home hub Investments in people and technology for growth 9

30 Digital Opportunity areas Connected Service transformation Customer experience ~60K Rooftop units ~300M Sq. ft. under management Smart factory Connected products ~900K Real estate agents ~500K Hotel rooms ~10M+ Monitored shipments New revenues / Efficiencies 10

31 CCS 2020 Outlook Sales ($B, cfx) Adjusted operating profit* ($B, cfx) Adjusted operating profit* ($B, afx) E CAGR 3-5% Organic growth % Innovation Cost / cash focus Portfolio optimization E 2020E - Sustainable value creation 2014 to 2017 adjusted operating profit (afx and cfx) restated for pension accounting change (ASU ). See appendix for Pro Forma pension accounting change impact. See appendix for reported sales and adjusted operating profit (afx). *See appendix for additional information regarding this non-gaap financial measure. 11

32 Dave Gitlin PRESIDENT

33 Key Messages Delivering on commitments Solid E on track Executing priorities Cost reduction Aftermarket Digital and innovation Positioning for the future Creating the industry s premier aerospace company 1

34 Financial Outlook (YOY growth) 2018 expectations E adjusted operating profit* March 2016 outlook Organic sales* Up low single digit 10% 9% 7-9% 7-9% Commercial OE Up low single 8% 7% Commercial AM Up low-to-mid single 6% 5% 4% Military Up low-to-mid single 3% 2% 1% Adjusted operating profit* $ M 0% 2018 expectations E CAGR 2018 in line with 2020 targets Excludes impact from the proposed acquisition of Rockwell Collins. *See appendix for additional information regarding these non-gaap financial measures. 2

35 2020 Key Drivers Commercial aftermarket (Organic sales* CAGR) Product cost reduction (Average YOY cost reduction, $M) 7% 4-6% Growth drivers Growth drivers Traffic / utilization 210 Supply Chain Fleet growth Productivity Upgrades / surplus Footprint E E E E Commercial aftermarket and product cost reduction remain on track Excludes impact from the proposed acquisition of Rockwell Collins. *See appendix for additional information regarding this non-gaap financial measure. 3

36 Digital and Innovation Digital More electric aircraft De-icing Actuation Electric distribution Flight controls Service transformation Customer experience Thrust reversers Smart factory Connected products Electric propulsion Environmental control systems Engine systems Generators Making key advancements in digital and innovation 4

37 Rockwell Collins Acquisition Cost synergies Key aircraft content Expanded customer channels Revenue synergies A transformative combination 5

38 Projected Cost Synergies ~4 5% of sales ~7% of sales $600M+ ~6% of sales $500M+* Public company costs / SG&A $350M - $400M Procurement Productivity / footprint 0 Planned Realized Planned Applying lessons learned from the Goodrich acquisition *$650M one-time costs to achieve synergies 6

39 New Content Will Drive Growth (per shipset) 7 ~$6M ~$3M COL 2X COL UTAS 1 UTAS 0 Legacy New A320ceo B737 B777 CRJ A320neo B737 MAX B777X CSeries B787 E1 Global 5000 G550 F-15/F-16 E2 Global 7000 G650 F-35 A350 Key content on the right platforms 7

40 Projected Customer Channel Expansion Sales mix Direct sales opportunities (Commercial OE) (2017 pro forma) UTAS + COL UTAS COL Defense 25% Large Comm'l OEM 33% Sales % Buyer furnished equipment Sales Buyer furnished equipment Comm'l AM 33% Other Comm'l OEM 9% Seller furnished equipment Seller furnished equipment Total Sales = ~$23B Balanced portfolio with more growth opportunities with our airline customers 8

41 Projected Revenue Synergies Intelligent aircraft Integrated and optimized aircraft products Advanced defense systems Prognostics and health management Autonomy Connected battlefield Differentiated solutions for our customers 9

42 UTC Aerospace Systems 2020 Outlook 0.0 Adjusted sales* ($B) Adjusted operating profit* ($B) E CAGR % 7-9% Delivering on commitments Executing priorities Rockwell Collins: a game-changing combination E 2020E - Excludes impact from the proposed acquisition of Rockwell Collins to 2017 adjusted operating profit restated for pension accounting change (ASU ). See appendix for Pro Forma pension accounting change impact. *See appendix for additional information regarding these non-gaap financial measures. 10

43 Bob Leduc PRESIDENT

44 Pratt & Whitney 2018 Expectations ($ millions) Sales up low teens Organic* up low-teens Adjusted Operating Profit* up $25 75M Commercial OE** up ~20% Commercial OE mix ~350 Commercial AM** up ~10% Commercial aftermarket Military ~125 Military OE up ~25% 2018 expectations (Excluding FX) FX $25 75M + ~0M Military AM up ~10% 2018 expectations (Including FX) $25 75M *See appendix for additional information regarding these non-gaap finance measures. **Includes large commercial and P&W Canada. 1

45 Pratt & Whitney Strong Positioning 2017 Pratt & Whitney Canada Canada Military Engines Military Engines Commercial Engines Commercial Engines Balanced portfolio Positioned for growth $16.5B adjusted sales* (up 9% organically) Focused on our core Photo: Lockheed Martin *See appendix for additional information regarding this non-gaap financial measure. 2

46 Strategic Priorities Priorities 2017 Achievements 2018 Focus Execute delivery and cost plans 374 GTF engines delivered GTF upgrades Successful ramp and continued cost reduction Continued innovation Investment discipline Manufacturing automation & digitization Aftermarket investment Execute digital strategy Investment allocation to new programs and technologies On track to achieve 2020 goals 3

47 Pratt & Whitney Canada Recent wins Engine shipments (Engines) P&WC engines 75,000 Installed base (Engines) 60,000 Regional APU 45,000 Helicopter 30,000 Business Jet 15,000 General Aviation E 2020E E Franchise positioned for continued industry leadership 4

48 Military Engines Engine shipments (Engines*) 10,000 Installed base (Engines*) Photo: Lockheed Martin 8,000 F-35 JSF Mobility / tanker 6,000 Legacy bomber / special mission / trainer Photo: U.S. Air Force 4,000 KC-46A Tanker Tactical 2,000 B-21 Bomber Photo: U.S. Air Force E 2020E E * Excludes 8,880 APUs in 2010 estimated to grow to 15,500 in 2020 Military engine portfolio well positioned for the future 5

49 Large Commercial Engines Recent major GTF wins 2018 Entry Into Service 20,000 Installed base (Engines*) 18,000 16,000 14,000 GTF E190-E2 EIS Q2 Photo: Embraer 12,000 GTF 10,000 8,000 6,000 V2500 V2500 KC-390 EIS Q3 Photo: Embraer 4,000 PW4000 PW4000 2,000 Other Other E 2025E Strong backlog positions business for long-term growth *Includes announced and unannounced firm & option orders. 6

50 Commercial Aftermarket Shop visits Large commercial engines Pratt & Whitney Canada engines Enablers for growth ~9,100 ~9,700 ~10,300 ~7,800 Repair development and TAT Customer e-commerce Portal E 2023E 2026E Overhaul center operations Digital engine monitoring Commercial aftermarket poised to deliver returns for years to come 7

51 Digital Digital design Smart factory Connected products Design optimization 100x 1,000x faster data search/aggregation 3x faster simulation turn time Reduced program risk and rework Automated demand forecasting and planning 100% visibility into part production process Reduced WIP and labor costs Increased productivity Full-flight engine data and predictive analytics Improved technical investigation speed/accuracy Enhanced customer performance monitoring Fewer disruptions/unscheduled removals Leveraging digital throughout the value stream 8

52 Productivity and Quality Fan blade automation Module assembly automation Neo turbine disc automation 40% reduction in lead time 20% increase in yield 30% reduction in cost 50% reduction in lead time 40% increase in yield 20% reduction in cost 50% reduction in lead time 40% reduction in quality flags 16% reduction in cost Initiatives are achieving productivity and quality objectives 9

53 Pratt & Whitney 2020 Outlook Adjusted sales* ($B) Adjusted operating profit* ($B) E CAGR % Commercial aftermarket growth % Commercial OEM cost reduction Military program execution E 2020E to 2017 adjusted operating profit restated for pension accounting change (ASU ). See appendix for Pro Forma pension accounting change impact. *See appendix for additional information regarding these non-gaap financial measures. 10

54 Pratt & Whitney Most diversified small-engine portfolio 15 new applications in last 5 years Best-positioned military engine portfolio Fighter, tanker, bomber, APU and future opportunities GTF engine is architecture of choice 7-year backlog* Photo: Lockheed Martin *Includes Footnotes: announced Arial 10 pt. and unannounced firm & option orders. 100,000 engines in service by

55 Appendix

56 Use and Definitions of Non-GAAP Financial Measures United Technologies Corporation reports its financial results in accordance with accounting principles generally accepted in the United States ("GAAP"). We supplement the reporting of our financial information determined under GAAP with certain non-gaap financial information. The non-gaap information presented provides investors with additional useful information, but should not be considered in isolation or as substitutes for the related GAAP measures. Moreover, other companies may define non-gaap measures differently, which limits the usefulness of these measures for comparisons with such other companies. We encourage investors to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure. Adjusted net sales, organic sales, adjusted operating profit, adjusted net income and adjusted earnings per share ( EPS ) are non-gaap financial measures. Adjusted net sales represents consolidated net sales from continuing operations (a GAAP measure), excluding significant items of a non-recurring and/or nonoperational nature (hereinafter referred to as other significant items ). Organic sales represents consolidated net sales (a GAAP measure), excluding the impact of foreign currency translation, acquisitions and divestitures completed in the preceding twelve months and other significant items. Adjusted operating profit represents income from continuing operations (a GAAP measure), excluding restructuring costs and other significant items. Adjusted net income represents net income from continuing operations (a GAAP measure), excluding restructuring costs and other significant items. Adjusted EPS represents diluted earnings per share from continuing operations (a GAAP measure), excluding restructuring costs and other significant items. For the business segments, when applicable, adjustments of net sales, operating profit and margins similarly reflect continuing operations, excluding restructuring and other significant items. Management believes that the non- GAAP measures just mentioned are useful in providing period-to-period comparisons of the results of the Company s ongoing operational performance. Free cash flow is a non-gaap financial measure that represents cash flow from operations (a GAAP measure) less capital expenditures. Management believes free cash flow is a useful measure of liquidity and an additional basis for assessing UTC's ability to fund its activities, including the financing of acquisitions, debt service, repurchases of UTC's common stock and distribution of earnings to shareholders. A reconciliation of the non-gaap measures to the corresponding amounts prepared in accordance with GAAP appears in the tables in this Appendix. The tables provide additional information as to the items and amounts that have been excluded from the adjusted measures. When we provide our expectation for adjusted EPS, adjusted operating profit, organic sales and free cash flow on a forward-looking basis, a reconciliation of the differences between the non-gaap expectations and the corresponding GAAP measures (expected diluted EPS from continuing operations, operating profit, sales and expected cash flow from operations) generally is not available without unreasonable effort due to potentially high variability, complexity and low visibility as to the items that would be excluded from the GAAP measure in the relevant future period, such as unusual gains and losses, the ultimate outcome of pending litigation, fluctuations in foreign currency exchange rates, the impact and timing of potential acquisitions and divestitures, and other structural changes or their probable significance. The variability of the excluded items may have a significant, and potentially unpredictable, impact on our future GAAP results. 1

57 2017 Full Year Sales Reconciliation Total Growth Organic FX Net Acquisitions Other Otis 4% 2% 0% 1% 1% CCS 6% 4% 1% 1% 0% Pratt & Whitney 9% 9% 1% 0% (1%) Aerospace Systems 2% 2% 0% 0% 0% Total UTC* 5% 4% 0% 1% 0% *Reflects consolidated net sales. 2

58 Segment Data GAAP UNITED TECHNOLOGIES CORPORATION SEGMENT DATA - Reported ($ Millions except per share amounts) 1st 2nd rd 4th st 2nd rd 4th 2016 Qtr. Qtr. Qtr. Qtr. Total Qtr. Qtr. Qtr. Qtr. Total Otis Net Sales 2,804 3,131 3,156 3,250 12,341 2,715 3,097 3,018 3,063 11,893 Operating Profit (a) , ,147 Operating Profit % 16.1% 17.4% 17.6% 14.5% 16.4% 17.2% 18.8% 19.4% 16.8% 18.1% UTC Climate, Controls & Security Net Sales 3,892 4,712 4,688 4,520 17,812 3,728 4,459 4,415 4,249 16,851 Operating Profit (a), (b), (c), (g), (m),(t) , ,956 Operating Profit % 24.7% 18.5% 17.7% 14.1% 18.5% 16.3% 19.6% 18.1% 15.9% 17.5% Pratt & Whitney Net Sales (d), (o) 3,758 4,070 3,871 4,461 16,160 3,588 3,813 3,501 3,992 14,894 Operating Profit (a), (d), (o) , ,545 Operating Profit % 10.5% 9.9% 5.9% 9.8% 9.0% 11.4% 10.1% 9.7% 10.2% 10.4% UTC Aerospace Systems Net Sales 3,611 3,640 3,637 3,803 14,691 3,505 3,716 3,646 3,598 14,465 Operating Profit (a) , ,298 Operating Profit % 16.0% 15.9% 16.9% 15.8% 16.1% 15.3% 15.7% 16.5% 16.1% 15.9% Total Segments Net Sales 14,065 15,553 15,352 16,034 61,004 13,536 15,085 14,580 14,902 58,103 Operating Profit 2,384 2,398 2,228 2,141 9,151 2,020 2,421 2,325 2,180 8,946 Operating Profit % 16.9% 15.4% 14.5% 13.4% 15.0% 14.9% 16.0% 15.9% 14.6% 15.4% Corporate, Eliminations, and Other Net Sales: Other (250) (273) (290) (354) (1,167) (179) (211) (226) (243) (859) Operating Profit: General corporate expenses (a) (104) (106) (105) (126) (441) (91) (97) (92) (126) (406) Eliminations and other (a), (h), (n),(p),(q), (u) (13) (2) 40 (63) (38) (415) (368) Consolidated Net Sales 13,815 15,280 15,062 15,680 59,837 13,357 14,874 14,354 14,659 57,244 Operating Profit 2,267 2,290 2,163 1,952 8,672 1,945 2,337 2,251 1,639 8,172 Operating Profit % 16.4% 15.0% 14.4% 12.4% 14.5% 14.6% 15.7% 15.7% 11.2% 14.3% Interest expense, net (e), (i), (j),( r) (213) (226) (223) (247) (909) (223) (225) (225) (366) (1,039) Income from continuing operations before income taxes 2,054 2,064 1,940 1,705 7,763 1,722 2,112 2,026 1,273 7,133 Income tax expense (f), (k), (l), (s), (v),(w),(x) (586) (532) (506) (1,219) (2,843) (469) (587) (492) (149) (1,697) Effective Tax Rate 28.5% 25.8% 26.1% 71.5% 36.6% 27.2% 27.8% 24.3% 11.7% 23.8% Income from continuing operations 1,468 1,532 1, ,920 1,253 1,525 1,534 1,124 5,436 Income (loss) from discontinued operations (47) 37 (11) (10) Net income 1,468 1,532 1, ,920 1,264 1,478 1,571 1,113 5,426 Less: Noncontrolling interest in subsidiaries' earnings (82) (93) (104) (89) (368) (81) (99) (91) (100) (371) Net income attributable to common shareowners 1,386 1,439 1, ,552 1,183 1,379 1,480 1,013 5,055 Net income attributable to common shareowners: Income from continuing operations 1,386 1,439 1, ,552 1,172 1,426 1,443 1,024 5,065 Income (loss) from discontinued operations (47) 37 (11) (10) Continuing Operations 1st 2nd 3rd 4th st 2nd 3rd 4th 2016 Qtr. Qtr. Qtr. Qtr. Total Qtr. Qtr. Qtr. Qtr. Total Earnings per share - basic Earnings per share - diluted Discontinued Operations Earnings (loss) per share - basic (0.06) 0.04 (0.01) (0.01) Earnings (loss) per share - diluted (0.06) 0.04 (0.01) (0.01) Total EPS attributable to common shareowners Total basic earnings per share Total diluted earnings per share Weighted average number of shares outstanding (millions) Basic shares Diluted shares Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Q4 Total Effective Tax Rate - continuing ops 28.5% 25.8% 26.1% 71.5% 36.6% 27.2% 27.8% 24.3% 11.7% 23.8% 3

59 Segment Data Notes The earnings release and conference-call discussion adjust 2017 and 2016 segment results for restructuring costs as well as certain significant non-recurring and/or non-operational items. The following restructuring costs and significant non-recurring and/or non-operational items are included in current and prior year GAAP results and have been excluded from the adjusted results (non-gaap measures) presented in the earnings release and conference-call discussion. (a) Restructuring costs as included in 2017 and 2016 results: Restructuring Costs Restructuring Costs Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Q4 Total Operating Profit: Otis (5) (12) (6) (27) (50) (15) (16) (10) (18) (59) UTC Climate, Controls & Security (23) (18) (43) (27) (111) (28) (25) (18) 6 (65) Pratt & Whitney - (6) 2 (1) (5) (5) (66) 21 (61) (111) UTC Aerospace Systems (23) (24) (17) (16) (80) (13) (8) (11) (17) (49) Total Segments (51) (60) (64) (71) (246) (61) (115) (18) (90) (284) General corporate expenses (1) - (1) (2) (4) - - (1) - (1) Eliminations and other (3) (3) (1) (1) (4) 1 (5) Total within continuing operations (52) (60) (65) (76) (253) (62) (116) (23) (89) (290) Total within discontinued operations Total UTC (52) (60) (65) (76) (253) (62) (116) (23) (89) (290) (b) Q2 2016: Approximately $12 million of acquisition and integration costs related to UTC Climate, Controls & Security. (c) Q3 2016: Approximately $11 million of acquisition and integration costs related to UTC Climate, Controls & Security. (d) Q3 2016: Approximately $184 million to record in sales and $95 million in losses from Pratt & Whitney on-going customer contract negotiations. (e) Q3 2016: Approximately $2 million of favorable pre-tax interest adjustments related to the IRS conclusion of Goodrich Corporation's tax years. (f) Q3 2016: Approximately $56 million of favorable income tax adjustments related to the IRS conclusion of Goodrich Corporation's tax years. (g) Q4 2016: Approximately $9 million of acquisition and integration costs related to UTC Climate, Controls & Security. (h) Q4 2016: Approximately $423 million of pension settlement charges resulting from defined benefit plan derisking actions. (i) Q4 2016: Approximately $164 million of net extinguishment loss from early redemption of debt. (j) Q4 2016: Approximately $22 million of favorable pre-tax interest adjustments related to the IRS conclusion of tax years. (k) Q4 2016: Approximately $150 million of favorable income tax adjustments related to the IRS conclusion of tax years. (l) Q4 2016: Approximately $25 million of favorable income tax adjustments related to changes in French tax laws. (m) Q1 2017: Approximately $379 million of pre-tax gains related to sale of available-for-sales securities at UTC Climate, Controls & Security. (n) Q1 2017: Approximately $1 million of pre-tax gains related to sale of available-for-sales securities. (o) Q3 2017: Approximately $385 million to record in sales and $196 million in losses from Pratt & Whitney customer contract matters. (p) Q3 2017: Approximately $120 million of pre-tax gains related to sale of available-for-sales securities. (q) Q3 2017: Approximately $27 million of transaction costs related to merger agreement with Rockwell Collins. (r) Q3 2017: Approximately $9 million of favorable pre-tax interest adjustments related to expiration of tax statute of limitations for 2013 tax year. (s) Q3 2017: Approximately $55 million of favorable income tax adjustments related to expiration of tax statute of limitations for 2013 tax year. (t) Q4 2017: Approximately $96 million of pre-tax charges related to product recall program initiated at UTC Climate, Controls & Security. (u) Q4 2017: Approximately $38 million of transaction and integration costs related to merger agreement with Rockwell Collins. (v) Q4 2017: Approximately $690 million of unfavorable income tax adjustments related to the estimated impact of the U.S tax reform legislation enacted on December 22, 2017, including the effects related to repatriation of undistributed foreign earnings provision and other revaluations of U.S deferred taxes. (w) Q4 2017: Approximately $6 million of pre-tax interest charges related to tax law changes in Canada. (x) Q4 2017: Approximately $32 million of net unfavorable tax adjustments related to tax law changes in Canada & France. 4

60 Segment Data Adjusted UNITED TECHNOLOGIES CORPORATION SEGMENT DATA - Adjusted (Unaudited) ($ Millions except per share amounts) Ex Rest & Significant non-recurring and non-operational Ex Rest & Significant non-recurring and non-operational items items 1st 2nd 3rd 4th st 2nd 3rd 4th 2016 Qtr. Qtr. Qtr. Qtr. Total Qtr. Qtr. Qtr. Qtr. Total Otis Net Sales 2,804 3,131 3,156 3,250 12,341 2,715 3,097 3,018 3,063 11,893 Operating Profit (a) , ,206 Operating Profit % 16.3% 17.8% 17.8% 15.3% 16.8% 17.7% 19.3% 19.7% 17.4% 18.5% UTC Climate, Controls & Security Net Sales 3,892 4,712 4,688 4,520 17,812 3,728 4,459 4,415 4,249 16,851 Operating Profit (a), (b), (c), (g), (m),(t) , ,053 Operating Profit % 15.6% 18.9% 18.6% 16.8% 17.6% 17.0% 20.4% 18.8% 16.0% 18.1% Pratt & Whitney Net Sales (d), (o) 3,758 4,070 4,256 4,461 16,545 3,588 3,813 3,685 3,992 15,078 Operating Profit (a), (d), (o) , ,751 Operating Profit % 10.5% 10.0% 9.9% 9.8% 10.0% 11.6% 11.9% 11.2% 11.8% 11.6% UTC Aerospace Systems Net Sales 3,611 3,640 3,637 3,803 14,691 3,505 3,716 3,646 3,598 14,465 Operating Profit (a) , ,347 Operating Profit % 16.6% 16.6% 17.4% 16.2% 16.7% 15.7% 15.9% 16.8% 16.5% 16.2% Total Segments Net Sales 14,065 15,553 15,737 16,034 61,389 13,536 15,085 14,764 14,902 58,287 Operating Profit 2,056 2,458 2,488 2,308 9,310 2,081 2,548 2,449 2,279 9,357 Operating Profit % 14.6% 15.8% 15.8% 14.4% 15.2% 15.4% 16.9% 16.6% 15.3% 16.1% Corporate, Eliminations, and Other Net Sales: Other (250) (273) (290) (354) (1,167) (179) (211) (226) (243) (859) Operating Profit: General corporate expenses (a) (103) (106) (104) (124) (437) (91) (97) (91) (126) (405) Eliminations and other (a), (h), (n),(p),(q), (u) (14) (2) (53) (22) (91) Consolidated Net Sales 13,815 15,280 15,447 15,680 60,222 13,357 14,874 14,538 14,659 57,428 Operating Profit 1,939 2,350 2,331 2,162 8,782 2,007 2,465 2,380 2,160 9,012 Operating Profit % 14.0% 15.4% 15.1% 13.8% 14.6% 15.0% 16.6% 16.4% 14.7% 15.7% Interest expense, net (e), (i), (j),( r) (213) (226) (232) (241) (912) (223) (225) (227) (224) (899) Income from continuing operations before income taxes 1,726 2,124 2,099 1,921 7,870 1,784 2,240 2,153 1,936 8,113 Income tax expense (f), (k), (l), (s), (v),(w),(x) (462) (552) (615) (558) (2,187) (489) (627) (600) (566) (2,282) Effective Tax Rate 26.8% 26.0% 29.3% 29.0% 27.8% 27.4% 28.0% 27.9% 29.2% 28.1% Income from continuing operations 1,264 1,572 1,484 1,363 5,683 1,295 1,613 1,553 1,370 5,831 Income (loss) from discontinued operations (47) 37 (11) (10) Net income 1,264 1,572 1,484 1,363 5,683 1,306 1,566 1,590 1,359 5,821 Less: Noncontrolling interest in subsidiaries' earnings (82) (93) (104) (89) (368) (81) (99) (91) (100) (371) Net income attributable to common shareowners 1,182 1,479 1,380 1,274 5,315 1,225 1,467 1,499 1,259 5,450 Net income attributable to common shareowners: From continuing operations 1,182 1,479 1,380 1,274 5,315 1,214 1,514 1,462 1,270 5,460 From discontinued operations (47) 37 (11) (10) 5

61 EPS Reconciliation Reconciliation of Diluted Earnings per Share to Adjusted Diluted Earnings per Share (dollars in millions except per share amounts) Diluted earnings per share attributable to common shareowners Less: diluted earnings (loss) per share from discontinued operations attributable to common shareowners Diluted earnings per share - Net income from continuing operations attributable to common shareowners (GAAP) Net income attributable to common shareowners 2017 Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Q4 Total $ 1.73 $ 1.80 $ 1.67 $ 0.50 $ 5.70 $ 1.42 $ 1.65 $ 1.78 $ 1.25 $ (0.06) 0.04 (0.01) (0.01) $ 1.73 $ 1.80 $ 1.67 $ 0.50 $ 5.70 $ 1.41 $ 1.71 $ 1.74 $ 1.26 $ 6.13 $ 1,386 $ 1,439 $ 1,330 $ 397 $ 4,552 $ 1,183 $ 1,379 $ 1,480 $ 1,013 $ 5, Less: Income (loss) from discontinued operations attributable to common shareowners (47) 37 (11) (10) Net income from continuing operations attributable to common shareowners 1,386 1,439 1, ,552 1,172 1,426 1,443 1,024 5,065 Adjustments to net income from continuing operations attributable to common shareowners: Restructuring costs (52) (60) (65) (76) (253) (62) (116) (23) (89) (290) Charge resulting from product recall program (96) (96) Collins Integration & transaction Costs (38) (38) Pre-tax gains related to sale of available-for-sales securities Acquisition and integration costs - - (27) - (27) - (12) (11) (9) (32) Charge resulting from customer contract matters - - (196) - (196) - - (95) - (95) Pension settlement charge resulting from defined benefit plan de-risking actions (423) (423) Net extinguishment loss from early redemption of debt, included in interest expense, net (164) (164) Other significant non-recurring and non-operational items included in interest expense, net (6) Income tax benefit on restructuring costs and significant non-recurring and non-operational items (124) U.S Tax Reform Legislation (690) (690) Other significant non-recurring and non-operational gains (charges) recorded within income tax expense (32) Total adjustments to net income from continuing operations attributable to common shareowners 204 (40) (50) (877) (763) (42) (88) (19) (246) (395) Adjusted net income from continuing operations attributable to common shareowners $ 1,182 $ 1,479 $ 1,380 $ 1,274 $ 5,315 $ 1,214 $ 1,514 $ 1,462 $ 1,270 $ 5,460 Less: Impact of total adjustments on diluted earnings per share Adjusted diluted earnings per share - Net income from continuing operations attributable to common shareowners (Non-GAAP) $ 0.25 $ (0.05) $ (0.06) $ (1.10) $ (0.95) $ (0.05) $ (0.11) $ (0.02) $ (0.30) $ (0.48) $ 1.48 $ 1.85 $ 1.73 $ 1.60 $ 6.65 $ 1.46 $ 1.82 $ 1.76 $ 1.56 $

62 Free Cash Flow Reconciliation ($ millions) Full Year Net income attributable to common shareowners 4,552 5,065 from continuing operations Depreciation & amortization 2,140 1,962 Change in working capital (52) (1,161) Other (1,009) 546 Cash flow from operations 5,631 6,412 Capital expenditures (2,014) (1,699) Free cash flow 3,617 4,713 Free cash flow as a % of net income attributable to common shareowners from continuing operations 79% 93% 7

63 Pension Accounting Change Impact 2017 Pro Forma Pro Forma Restatement for UNITED TECHNOLOGIES CORPORATION SEGMENT DATA - Adjusted (Unaudited) Pension Accounting Change (ASU ) 2017 ($ Millions except per share amounts) Ex Rest & Significant non-recurring and non-operational Ex Rest & Significant non-recurring and non-operational As Reported items items 1st 2nd 3rd 4th st 2nd 3rd 4th st 2nd 3rd 4th 2017 Qtr. Qtr. Qtr. Qtr. Total Qtr. Qtr. Qtr. Qtr. Total Qtr. Qtr. Qtr. Qtr. Total Otis Net Sales 2,804 3,131 3,156 3,250 12,341 2,804 3,131 3,156 3,250 12,341 2,804 3,131 3,156 3,250 12,341 Operating Profit (a) , , ,050 Operating Profit % 16.1% 17.4% 17.6% 14.5% 16.4% 16.3% 17.8% 17.8% 15.3% 16.8% 16.1% 17.6% 17.6% 15.1% 16.6% UTC Climate, Controls & Security Net Sales 3,892 4,712 4,688 4,520 17,812 3,892 4,712 4,688 4,520 17,812 3,892 4,712 4,688 4,520 17,812 Operating Profit (a), (b), (c), (g), (m),(t) , , ,993 Operating Profit % 24.7% 18.5% 17.7% 14.1% 18.5% 15.6% 18.9% 18.6% 16.8% 17.6% 14.8% 18.1% 17.9% 16.0% 16.8% Pratt & Whitney Net Sales (d), (o) 3,758 4,070 3,871 4,461 16,160 3,758 4,070 4,256 4,461 16,545 3,758 4,070 4,256 4,461 16,545 Operating Profit (a), (d), (o) , , ,502 Operating Profit % 10.5% 9.9% 5.9% 9.8% 9.0% 10.5% 10.0% 9.9% 9.8% 10.0% 9.5% 9.1% 9.0% 8.8% 9.1% UTC Aerospace Systems Net Sales 3,611 3,640 3,637 3,803 14,691 3,611 3,640 3,637 3,803 14,691 3,611 3,640 3,637 3,803 14,691 Operating Profit (a) , , ,267 Operating Profit % 16.0% 15.9% 16.9% 15.8% 16.1% 16.6% 16.6% 17.4% 16.2% 16.7% 15.3% 15.3% 16.1% 15.0% 15.4% Total Segments Net Sales 14,065 15,553 15,352 16,034 61,004 14,065 15,553 15,737 16,034 61,389 14,065 15,553 15,737 16,034 61,389 Operating Profit 2,384 2,398 2,228 2,141 9,151 2,056 2,458 2,488 2,308 9,310 1,937 2,332 2,363 2,180 8,812 Operating Profit % 16.9% 4.0% 15.4% 14.5% 13.4% 15.0% 14.6% 15.8% 15.8% 14.4% 15.2% 13.8% 15.0% 15.0% 13.6% 14.4% Corporate, Eliminations, and Other Net Sales: Other (250) (273) (290) (354) (1,167) (250) (273) (290) (354) (1,167) (250) (273) (290) (354) (1,167) Operating Profit: General corporate expenses (a) (104) (106) (105) (126) (441) (103) (106) (104) (124) (437) (102) (105) (103) (124) (434) Eliminations and other (a), (h), (n),(p),(q), (u) (13) (2) 40 (63) (38) (14) (2) (53) (22) (91) (15) (5) (65) (52) (137) Consolidated Net Sales 13,815 15,280 15,062 15,680 59,837 13,815 15,280 15,447 15,680 60,222 13,815 15,280 15,447 15,680 60,222 Operating Profit 2,267 2,290 2,163 1,952 8,672 1,939 2,350 2,331 2,162 8,782 1,820 2,222 2,195 2,004 8,241 Operating Profit % 16.4% 15.0% 14.4% 12.4% 14.5% 14.0% 15.4% 15.1% 13.8% 14.6% 13.2% 14.5% 14.2% 12.8% 13.7% Non-service related pension costs Interest expense, net (e), (i), (j),( r) (213) (226) (223) (247) (909) (213) (226) (232) (241) (912) (213) (226) (232) (241) (912) Income from continuing operations before income taxes 2,054 2,064 1,940 1,705 7,763 1,726 2,124 2,099 1,921 7,870 1,726 2,124 2,099 1,921 7,870 8

64 Pension Accounting Change Impact 2016 Pro Forma UNITED TECHNOLOGIES CORPORATION SEGMENT DATA - Adjusted (Unaudited) ($ Millions except per share amounts) Ex Rest & Significant non-recurring and non-operational As Reported items Pro Forma Restatement for Pension Accounting Change (ASU ) 2016 Ex Rest & Significant non-recurring and non-operational items 1st 2nd 3rd 4th st 2nd 3rd 4th st 2nd 3rd 4th 2016 Qtr. Qtr. Qtr. Qtr. Total Qtr. Qtr. Qtr. Qtr. Total Qtr. Qtr. Qtr. Qtr. Total Otis Net Sales 2,715 3,097 3,018 3,063 11,893 2,715 3,097 3,018 3,063 11,893 2,715 3,097 3,018 3,063 11,893 Operating Profit (a) , , ,183 Operating Profit % 17.2% 18.8% 19.4% 16.8% 18.1% 17.7% 19.3% 19.7% 17.4% 18.5% 17.5% 19.1% 19.5% 17.3% 18.4% UTC Climate, Controls & Security Net Sales 3,728 4,459 4,415 4,249 16,851 3,728 4,459 4,415 4,249 16,851 3,728 4,459 4,415 4,249 16,851 Operating Profit (a), (b), (c), (g), (m),(t) , , ,946 Operating Profit % 16.3% 19.6% 18.1% 15.9% 17.5% 17.0% 20.4% 18.8% 16.0% 18.1% 16.3% 19.8% 18.2% 15.4% 17.5% Pratt & Whitney Net Sales (d), (o) 3,588 3,813 3,501 3,992 14,894 3,588 3,813 3,685 3,992 15,078 3,588 3,813 3,685 3,992 15,078 Operating Profit (a), (d), (o) , , ,644 Operating Profit % 11.4% 10.1% 9.7% 10.2% 10.4% 11.6% 11.9% 11.2% 11.8% 11.6% 10.8% 11.2% 10.5% 11.1% 10.9% UTC Aerospace Systems Net Sales 3,505 3,716 3,646 3,598 14,465 3,505 3,716 3,646 3,598 14,465 3,505 3,716 3,646 3,598 14,465 Operating Profit (a) , , ,209 Operating Profit % 15.3% 15.7% 16.5% 16.1% 15.9% 15.7% 15.9% 16.8% 16.5% 16.2% 14.7% 15.0% 15.8% 15.6% 15.3% Total Segments Net Sales 13,536 15,085 14,580 14,902 58,103 13,536 15,085 14,764 14,902 58,287 13,536 15,085 14,764 14,902 58,287 Operating Profit 2,020 2,421 2,325 2,180 8,946 2,081 2,548 2,449 2,279 9,357 1,985 2,454 2,356 2,187 8,982 Operating Profit % 14.9% 16.0% 15.9% 14.6% 15.4% 15.4% 16.9% 16.6% 15.3% 16.1% 14.7% % % 14.7% 15.4% Corporate, Eliminations, and Other Net Sales: Other (179) (211) (226) (243) (859) (179) (211) (226) (243) (859) (179) (211) (226) (243) (859) Operating Profit: General corporate expenses (a) (91) (97) (92) (126) (406) (91) (97) (91) (126) (405) (90) (96) (90) (125) (401) Eliminations and other (a), (h), (n),(p),(q), (u) (415) (368) (6) (10) (3) 6 (13) Consolidated Net Sales 13,357 14,874 14,354 14,659 57,244 13,357 14,874 14,538 14,659 57,428 13,357 14,874 14,538 14,659 57,428 Operating Profit 1,945 2,337 2,251 1,639 8,172 2,007 2,465 2,380 2,160 9,012 1,889 2,348 2,263 2,068 8,568 Operating Profit % 14.6% 15.7% 15.7% 11.2% 14.3% 15.0% 16.6% 16.4% 14.7% 15.7% 14.1% 15.8% 15.6% 14.1% 14.9% Non-service related pension costs Interest expense, net (e), (i), (j),( r) (223) (225) (225) (366) (1,039) (223) (225) (227) (224) (899) (223) - (225) - (227) (224) (899) Income from continuing operations before income taxes 1,722 2,112 2,026 1,273 7,133 1,784 2,240 2,153 1,936 8,113 1,784 2,240 2,153 1,936 8,113 9